GSK Chief Strategy Officer David Redfern says he expects to see more merger and acquisition activity in the pharma industry as big pharma tries to cope with lost product revenues from patent expirations and generic competition. According to Redfern, as the pressure mounts more mergers will occur.
Additional factors favoring merger activity include many US pharma companies having big cash reserves that they will have difficulty repatriating and can use for M&A work. Redfern expects possible mergers of the Pfizer-Wyeth or Merck-Schering-Plough ilk, but also would expect to see mid-size companies acquired like Pfizer's buy up of King Pharmaceuticals. Redfern also would expect biotech's like Amgen and BiogenIdec to become more active as well -- although they might be targets if a big pharma company wants to follow the mega-merger model.
Of course, GSK will remain above the fray. Since they have already experienced the worst of their patent cliff, GSK will likely stick to targeted purchases of smaller companies. GSK also has plans to invest in the BRIC countries, but Redfern indicates that it is near impossible to find good opportunities with rising prices of companies seen in Brazil and Russia. See Business Standard and Fierce Biotech.
Posted by Bruce Lehr November 10th 2010.